9 Replies Latest reply on Jul 30, 2013 7:05 PM by JerryD

    Market High - Is now a good time to move CREF to TIAA?

    Mike465
      Does anyone have experience moving retirement income from CREF to TIAA fixed?   The market is currently (July 2013) at an all time high, and I'm within a few years of retirement, so I'm wondering if now is a prudent time to move some (not all) of my CREF investments to TIAA fixed.  
        • Re: Market High - Is now a good time to move CREF to TIAA?
          JerryD
          Moving to Traditional versus Supplemental which some of us can do, means that you will need just over 9 years to get it out again in 10 payments.
           
          I have a small amount in 3 different equity retirement accounts that have appreciated considerably.  Rather than trying to guess at the top, why not set an acceptable reduction at which time you will move out of CREF. You might be pleasantly surprised if the economy goes up a bit longer.
            • Re: Market High - Is now a good time to move CREF to TIAA?
              janjoey7754
              Can you say what 3 equity accounts have been so profitable?
                • Re: Market High - Is now a good time to move CREF to TIAA?
                  JerryD
                  janjoey7754 said...
                  Can you say what 3 equity accounts have been so profitable?
                   
                  TIAA-CREF is VERY sensitive to discussions on specific accounts and strategies. I have had posts deleted several times for mentioning specific accounts. I will say that the 3 equity accounts are all retirements accounts which is pretty much all I use to keep the choices manageable.
                   
                  The way I selected them is according to their investment focus and by studying their behavior during the last downturn or bubble before 2008. I looked at what kind of increase they exhibited for the 4-5 years after that downturn. Now, I know that past history is no guarantee of future behavior but it sure helps. After that I use the strategy of monitor, monitor, monitor in order to validate my choice and to keep attune to any trends that might spell disaster if left to run too long. So far these 3 choices are up 100-112% in just under 5 years.
                   
                  I spent many years chasing the hottest mutual funds and many weekends upset over the latest events. With the creation of ETF's which are very similar to the T-C accounts, I switched to a long-term view with specific goals and a monitor (not trade) strategy.
                   
                  Good luck.
              • Re: Market High - Is now a good time to move CREF to TIAA?
                Mike465
                Yes, I agree, it's impossible to "guess at the top".   Can you give me an example of what you mean by setting "an acceptable reduction at which time you will move out of CREF".   I definitely need the advice. Thanks.  
                  • Re: Market High - Is now a good time to move CREF to TIAA?
                    JerryD
                    When one sells is a personal choice but remember that losing 10% requires a 11% gain just to get back to even, 20% loss requires a 25% gain,  25% loss requires a 33%, etc. You can see how sitting on one's hands can imply years to get back where you once were. At some point you would have much better off to park the money at 0% or a very  low return and wait for a buying opportunity.
                     
                    In my opinion 2008 was one of those times and then the opportunity turned out to be stocks for a toe in the water with a small amount of our retirement funds. That has paid off quite well, but now is not the time to lose it by being "greedy" or indecisive.
                     
                    At our stage in life (retired with no new income from jobs) I am very sensitive to much more than a 10% correction at this stage of the economic recovery. That's a personal  decision you have to make, and we watch the market very carefully, especially after a 4-5 year run up. The economy has not really gotten red hot and by our definition dangerous so there may be more upside left than we think, but government actions can kill it. Make a choice and monitor, monitor, monitor - that doesn't mean to trade frequently whipping in and out.
                     
                    I have found that we frequently think these things to death. Do some self-reflection, set a goal, make a move and constantly review it. Don't be ashamed to admit that things happen and one has to change course when they do. Good luck, Mike!
                     
                      • Re: Market High - Is now a good time to move CREF to TIAA?
                        Sharon
                        You say things have gone up, but we still don't have the same money we put into stocks from 2007...if we are going to make any money at all, it will take years and years more.
                        Money in a simple CD for 5 years made much more money.  Seems you have to "buy and sell" and keep your eye on the market to come out ahead. Just buying and holding hasn't worked in the past 10 years.
                          • Re: Market High - Is now a good time to move CREF to TIAA?
                            JerryD
                            Sharon, we seem to be saying different things about the same investments, but one needs to look closer to see why we have different results. I just checked the charts for the 3 investments that I claim have such nice gains. The detail that is missing in our discussion is when the actual investments were made. You did yours in 2007 and I did ours late in 2008. Whereas I could have done much better if I had perfect timing. I had just "pretty good timing". I actually invested a bit too early. But one should never expect to have "perfect timing. In your case you seem to have invested near a very high value and held on through the worst of the drop.
                             
                            I would like to remind you of the high returns one needs when letting losses accumulate just to return to where you were with no gains at all. So timing is indeed very, very important.
                             
                             The decision to invest is good, but then one needs to be patient while waiting for a good time to do so - keep the powder "dry" as they say. I am always amazed by Warren Buffet. He is a genius of investing and freely dispenses his advice on how to do well. Paraphrasing one of his suggestions, when "everybody" is selling one should be looking at buying and while "everybody" is buying it's a good time to consider whether it is time to sell.
                             
                            It seems that in general most of us are very cautious and fear risk so we wait until it is "obvious" to sell or buy. I must admit that I was more than uncomfortable buying in late 2008. The risks seemed very high. But one has to take that step and looking at history and listening to Warren helps. I would say that your comfort when making the move is that you will also monitor, monitor, monitor and be willing to say you made a mistake and reverse it before the results exceed your goals. This takes "courage" but not a lot of smarts which would leave me out. What I have are a number of "ouches" and finally a realization that it's time to do something different.
                             
                            Hang in there, Sharon. It has taken decades to beat these lessons into this stubborn head, and I spent way more time and money than most on the learning.  Instead of beating ourselves up for past missteps, congratulate ourselves for learning and changing our approach based on that learning.
                             
                            Happy investing, Sharon. It's important for your retirement.
                             
                      • Re: Market High - Is now a good time to move CREF to TIAA?
                        cyber888
                        I think there's still some upside to this market, but that's just my opinion and nothing set on stone.   

                        If you want to be sure, you can move some of it to fixed income, but traditional fixed income is earning only at around 3.0% this time.   Of course, if you have a HUGE nest egg, then you may be able to live with that 3% growth.  So, only you can answer that.  
                         
                        If your nest egg is not that big, then your Equity holdings can give you 7% - 12% a year return, but there's more risk involved.
                         
                        This is all connected to your comfort zone and what gives you some peace of mind.  If you feel very uncomfortable with your portfolio and can't afford too much risk exposure, then do something about it and re-balance.  If you can afford to risk for growth, then by all means put a 60% - 75% in equity and the rest in fixed income. 
                         
                          • Re: Market High - Is now a good time to move CREF to TIAA?
                            JerryD
                            I personally do not believe in allocation buy-and-hold (and then hope that just the right mix will protect me from disasters like 2008-09) nor do I generally reallocate unless the market speaks to me or an opportunity becomes a liability. Reallocating to maintain an allocation is not in my strategy. I know that there are many that would disagree, but years of market observation and self-serving investment house marketing talk have lead me to take this different path.
                             
                            I make my opportunity choice(s) and monitor, monitor, monitor. Not afraid to say I made a mistake nor am I afraid to swiftly cut our loses to preserve principal. 
                             
                            PS: With my approach one must constantly ask and have others ask if he is making good decisions. If not, time to go very conservative. I also do not advocate annuities as do many (except Social Security, of course), but they may be part of the conservative choices.